Barclays has become the latest bank to launch a fund for UK farmers investing in renewable energy projects.
Some £100m has been made available to finance suitable solar, wind and hydro projects. Lending criteria will be similar to more traditional agricultural sectors with a need for appropriate security or proven business track record, but more weight will be given to projected Feed-in Tariff income when assessing each loan, Barclays head of agriculture Martin Redfearn said.
A similar £50m fund was launched by the Royal Bank of Scotland group, which includes NatWest, earlier this year. That was also targeted at wind and solar projects initially, with a view to extending the amount of money available and technologies covered if demand exceeded expectations.
Research conducted by both banks found that around one third of UK farmers expected to invest in renewable energy in an attempt to reduce energy bills, generate new income and cut their carbon footprint.
“What farmers see is a win-win – lower costs and increased income, and the majority expect the investment to pay for itself in under 10 years,” Mr Redfearn said.
“When looking at a new renewable project, reliable technology, competent maintenance and management are all important considerations, though of course farmers should also keep an eye on the current Feed-in Tariff rates offered to ensure it works for their business.”
RBS said that over half of agriculture businesses in its survey said they would need bank funding to take renewable energy plans forward. Advice would also be important, as many installations required extensive planning, feasibility studies and environmental impact assessments. With that in mind, RBS also set up a 200-strong team of relationship managers trained in the technical, legal and financial considerations specific to renewable energy.
But while both banks are keen to support wind and solar projects, there appears to be less appetite for those based on anaerobic digestion technology. “We’re focusing on wind, solar and water at the moment because in terms of number of projects, that is where the farmer interest is,” Mr Redfearn noted.
NFU deputy president Meurig Raymond welcomed the latest funding commitment, as commercial lending was essential to overcoming the significant upfront costs associated with renewable technologies.
“The opportunities for farmers to produce renewable energy thereby helping to decarbonise the economy and contribute to the UK’s long-term energy security are there for all to see,” he said.